Rupee Strengthens 29 Paise Against US Dollar in Early Trade, Supported by RBI and Jio IPO Inflows

The Indian rupee appreciated by 29 paise to 94.62 against the US dollar in early trade on Wednesday. The gain was driven by positive domestic market sentiments, RBI support, and foreign dollar inflows linked to the Jio IPO, though elevated crude oil prices and a firm US dollar limited further appreciation.

The Indian rupee appreciated 29 paise to 94.62 against the US dollar in early trade on Wednesday. The currency found support from positive sentiments in the domestic market, intervention by the Reserve Bank of India (RBI), and foreign dollar inflows tied to the Jio IPO, which opened for public subscription on the same day.

At the interbank foreign exchange market, the rupee opened stronger at 94.78 before gaining further ground to touch 94.62 against the American currency, marking an increase of 29 paise from its previous close. The forex market had remained closed on Tuesday on account of Dussehra, following a session on Monday where the rupee settled lower by 2 paise at 94.91 against the US dollar.

According to analysts, foreign investors managing dollar flows during the Jio IPO allotment process are utilizing sell/buy swaps. This involves offloading dollars for rupees in the spot market while simultaneously contracting to repurchase them within a short window, typically under a week.

Despite these positive drivers, the domestic currency faced headwinds from elevated crude oil prices and a firm US dollar. Brent crude, the global oil benchmark, traded up 1.42 per cent at USD 110.33 per barrel in futures trade, driven by supply disruption fears. Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, traded marginally higher by 0.06 per cent at 101.58.

In the broader financial markets, domestic equities rebounded. The Sensex climbed 665.10 points to reach 74,518, while the Nifty rose 188.40 points to 23,077.35, led by IT sector gains. Concurrently, Foreign Institutional Investors (FIIs) remained net sellers, offloading equities worth Rs 1,148.64 crore on Monday, according to exchange data.

"Large public offerings like the Jio IPO demonstrate how significant capital events can directly influence currency movements through foreign inflows and structured swap mechanisms. However, external macroeconomic pressures, particularly elevated crude oil prices above USD 110 per barrel, continue to pose a balancing challenge for the domestic currency. Businesses and investors must factor in these global commodity trends alongside domestic market liquidity when navigating foreign exchange exposure." — Dr. Shishir Gupta, Founder & CEO, StartupLanes